KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged the federal government to declare an “industrial emergency,” warning that Pakistan’s manufacturing sector is facing a systemic and potentially irreversible decline due to uncompetitive energy tariffs, elevated interest rates and a restrictive tax regime.
FPCCI President Atif Ikram Sheikh told The Express Tribune that Pakistani industries are operating at a severe disadvantage compared to regional competitors, largely because of soaring electricity costs. He noted that industries in Pakistan pay around 13 cents per unit, while neighbouring countries offer power at 7–8 cents, nearly half the local rate, severely undermining export competitiveness.
Despite surplus generation capacity, Sheikh said high energy prices continue to cripple key sectors such as textiles, vegetable oil and manufacturing. He added that FPCCI had rejected incremental relief packages, pointing out that no industrial consumer has received electricity at the promised Rs22 per unit, with actual bills reflecting Rs34–35 per unit.
Sheikh also criticised the tight monetary policy, saying persistently high interest rates of 15–16 percent over the past year have discouraged private investment. With inflation easing and the Consumer Price Index falling below 4 percent in December, he argued that the policy rate should be brought closer to 7 percent to revive economic activity.
He said Pakistan’s export performance remains sluggish, with limited growth confined to a few sectors. “We have remained stuck around $30 billion in exports for two decades. Achieving the $100 billion target will require serious policy corrections,” he warned.
Highlighting de-industrialisation, Sheikh said exporters face electricity tariffs of about 12.5 cents per unit, compared to 6–9 cents in competing economies such as India, Bangladesh and Vietnam, forcing hundreds of units to shut down and driving capital out of the country.
United Business Group (UBG) Patron-in-Chief SM Tanveer echoed these concerns, stating that the textile sector is facing an existential crisis, with over 100 mills closed. He criticised the reliance on high interest rates to control inflation, saying it has created a liquidity crunch and stalled industrial expansion.
The FPCCI has demanded a reduction in industrial income tax from 39 percent to 20 percent, a cut in gas tariffs from Rs3,900 to Rs2,400 per mmBtu, and a gradual reduction in the policy rate to 6 percent. It has also urged the Special Investment Facilitation Council (SIFC) to intervene, warning that delays could result in rising unemployment, declining exports and a deeper economic downturn.
Story by Usman Hanif
